A text to understand the trend of the mcu market

As sales prices drop, microcontroller companies are exploring new strategies to achieve economies of scale. These small but powerful chips are increasingly being used as a competitive alternative to more complex computing solutions, evolving from single-chip systems to highly integrated devices. Microcontrollers serve as the central processing units in various connected devices, playing a crucial role in the development of the Internet of Things (IoT). Without them, it would be challenging to realize the full potential of IoT. Figure 1: MCU demand is growing healthily, but overall market revenue growth is much slower. From Semico Research Despite their popularity, there is a cost to this expansion. While the market opportunities for MCUs are increasing, average selling prices have fallen significantly. The number of units required to recover development costs has risen, making it harder for some companies to remain profitable without major changes. Figure 2: The biggest growth in the MCU industry comes from consolidation. From IC Insights There are three main types of microcontrollers: 8-bit, 16-bit, and 32-bit. While some 4-bit MCUs are still in use, many customers have either moved to 8-bit or plan to do so soon. The 16-bit MCU is becoming the next mainstream option, though it's more expensive. However, the price of 32-bit MCUs has dropped rapidly, leading many customers who were considering 16-bit upgrades to instead move to more advanced chips. Rob Lineback, a senior market research analyst at IC Insights, stated, “This year, 32-bit ASP fell by 15%. We see a 7% annual price drop (CAGR). The 16-bit market has a CAGR of -2%, and the 8/4 market is also -2%. In the future, 32-bit MCUs may sell for less than 16-bit ones. This is pure competition and pricing pressure. The IoT is part of the driving force.” Joanne Itow, general manager of manufacturing at Semico Research, noted a similar trend: “Besides DRAM and NAND, ASPs in all logic chip markets are struggling. The only big winner in the MCU market is ARM, as they control the core low-power IP and security. Companies can develop these themselves, but using ARM is easier.” Same problem, different strategies Currently, two conflicting trends are shaping the MCU landscape – falling ASPs and rising complexity. This puts more pressure on manufacturers to improve efficiency in their processes and methods. One approach is to leverage existing features within these devices, but many companies are not fully utilizing them. Andrew Caples, senior product line manager for embedded software at Mentor, a Siemens company, said, “Take TrustZone; many of its capabilities are underused. You can increase reliability and create memory partitions, but it’s often not fully utilized. Power management is another feature that can greatly impact performance, especially battery life. Some MCUs have over 16 power states, but switching between them is complicated. To take advantage of these features, you need to invest heavily in software.” The rise in complexity has led to the adoption of more advanced process nodes, allowing more memory, connectivity, and processing power to be integrated into the same space. Moore’s Law is being applied differently in this market, with 32-bit MCUs now operating on 40nm nodes, and some companies developing 32/28nm versions. Geoffrey Tate, CEO of Flex Logix, explained, “The issue is that microcontroller companies have developed dozens or even hundreds of SKUs due to differences in serial I/O pin assignments—some use SPI, others UART, or different hardware configurations. As 40nm mask costs rise, maintaining so many variants becomes costly. Each variant requires a certain number of lookup tables for serial I/O programming.” One solution is to use embedded FPGAs to enhance the flexibility of microcontrollers, enabling them to meet diverse market needs without requiring a new MCU for each application. Another method is to streamline verification and reduce back-end design time. Frank Schirrmeister, senior director of product management and marketing at Cadence, said, “Portable Stimulus is interesting because it makes it easier to understand how some MCUs are becoming more like systems. Some microcontroller companies are selling these designs with custom software development, which can be used for evaluation.” One device, multiple uses These approaches help turn MCUs into ready-to-use devices that can be quickly customized for specific applications. However, further simplification is needed. Bill Neifert, senior director of market development at ARM, said, “In EDA, you’re more tolerant of tool oddities. But in the microcontroller market, developers want a debugger, compiler, and working system. Their final product isn’t a chip—it’s a system that effectively solves their problems. You need to provide a compact device with many features and options to meet the needs of both advanced users and amateurs.” The key is balancing time to market, cost, and optimization, which can vary depending on the application. Semico’s Itow said, “Some companies focus on specific applications like IIoT, while others take a general approach and customize around it. There are various opportunities, so even with integration, we’re likely to see new companies entering the market.” The real drivers are the IoT and consumer electronics markets, where MCUs are tailored for these segments. They include memory, processing, security, and communication technologies, though they are weaker than powerful SoCs. “In the past, most microcontrollers were used in industrial and automotive markets with long sales cycles,” Neifert said. “Now, they’re increasingly used in consumer electronics, where content needs to be up-to-date. As more such devices reach consumers, fast turnaround is essential, meaning the same microcontroller may have 10 different applications, many of which depend on software.” Some will be used in entirely new systems or as general-purpose add-ons, not as core components. Bill Hutchings, senior product marketing manager at Microchip Technology, said, “Some higher-performance cores and clocks are usually microprocessor-independent. For example, the sensor hub typically acts as a middle-tier microcontroller.” Redefine the MCU Over the years, the differentiation factor for microcontrollers has been functionality. 32-bit MCUs are significantly more powerful than 8-bit ones, so they come at a higher price. However, as companies advance, they are now developing devices that rival low-end microprocessors. Historically, there have been significant differences between microprocessors and MCUs. Microprocessors use both internal and external memory, whereas traditional MCUs rely solely on internal memory. This is beginning to change, with some MCUs now offering the ability to connect to DRAM or other external memory. “If you go back 15 years ago, you’d find 100 engineers and ask them to distinguish between a microcontroller and a microprocessor—they could definitely tell the difference,” said Steven Woo, distinguished inventor at Rambus. “Today, even 100 engineers might struggle to tell them apart. Part of the reason is Moore’s Law—more transistors on the die allow more functions.” With better space utilization, more on-chip and off-chip memory can be included. MCUs typically use a combination of DDR2 and flash memory, but as density increases, DDR2 memory sizes have grown to 2MB, along with 2MB of embedded flash. “Devices on the 32-bit product line have had the ability to connect to external memory for at least 6 or 7 years, but not many have taken advantage of it,” said Stuart McLaren, microcontroller product manager at STMicroelectronics. “We’ve seen this recently with the system packet interface, allowing more NVMs to store data and code. The key change is increased performance and features, leading to more applications. As systems become interconnected, nodes will communicate with gateways or the cloud, requiring a simple microcontroller to collect and aggregate sensor data.” The microcontroller is also moving upstream toward the cloud. “There are many cloud services running on gateways, performing more advanced analytics,” McLaren said. “We’ve seen external memory used for graphics processing, typically a 1 or 2 frame buffer, which can be rendered and refreshed. More and more microcontrollers are entering the IoT space—home, city, smart industry, and everything else. Every application has processing and security requirements, and they need to interface with real-world systems, often via RF or low-power Bluetooth. Power management is critical, from wearables to industrial applications. MCUs are the core of the IoT.” According to Dipesh Patel, vice president of physical IP engineering at ARM, MCUs are also being used in new applications like asset tracking. “With 32-bit, you can track the journey of a component securely. You can’t do this with 8 bits. MCUs are getting more complex, allowing more memory and better data handling.” He added that on-chip flash memory is increasing, especially in advanced designs moving to 40nm or even 28nm. While most MCUs still use older processes, some IoT designs are now using 65nm and 40nm. Mass customization and niche Cost has always been a key driver for MCUs, and while power characteristics were the primary consideration in recent years, it's hard to find a system without one. Gradually, system vendors have started designing MCUs for new tasks, many of which were previously overlooked. “We’ve seen them used as companion chips for fully integrated microprocessors and in security applications,” said Jeanette Wilson, product marketing manager at Microchip. “You might need basic authentication, and microcontrollers can act as hardened key memory. This involves a handshake with an ECC SoC, which can be placed in a tamper-proof package or used as an entropy source. Encryption/decryption adds another layer of security and includes a monotonic counter to prevent replay. While this is often done in software, doing it in hardware saves 8,000 to 12,000 lines of code and improves execution speed.” MCUs are also appearing on expansion boards and alongside sensors that measure a wide range of metrics, from motion to temperature. STMicroelectronics’ McLaren said, “We run them at frequencies up to 400MHz. In the past, this speed was only seen on MPUs. We’ve also seen cases where the microcontroller itself is connected to multiple microcontrollers, with APIs between the main controller and others.” To sum up The difficulty of distinguishing between different types of logic devices is growing, and as advanced packaging continues to be used in more designs, this challenge may persist. IC Insights’ Lineback said, “In the 1980s, MCUs were considered system-on-a-chip or computer-on-a-chip. Eventually, organizations like WSTS will define these categories differently.” At the same time, MCU vendors are striving to increase the value of their devices and delay price declines, as the trend of price cuts brings technical challenges to the industry. Will they add more flexibility, reduce the number of devices being developed, or change the way these devices are designed and verified? It’s still unclear. However, the importance of MCUs will only continue to grow, and these issues must be addressed.

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